Technological Opportunity and Productivity of R&D Activities

Economists have managed to find a positive impact of R&D efforts on productivity. However, the empirical results of their studies have not explained the observed sectoral differences in this important impact. With due reference to three global industries, namely, chemical, computer, and electrical/electronic, the objective of this study is to evaluate the impact of technological opportunity on the productivity of R&D activities. Technological opportunity refers to the ease of achievement of innovations and technical improvements, which could be jointly represented by the intensities of knowledge spillovers, inter-firm research overlap and scope of research. In this study, the degree of technological opportunity is quantified by patent statistics. The empirical findings confirm a positive relationship between technological opportunity and the productivity of R&D effort, and the estimated rate of return falls within the range as reported by past studies.